Over 90% of Private Consignment and Subsidy Project Expenses Used Locally
Up to 30 Million KRW Special Management Stabilization Fund Support for Small Business Owners
Incheon Mayor Park Nam-chun is presiding over the 'Emergency Meeting to Review the Response to the Novel Coronavirus Situation' and checking the cooperation system among related organizations for rapid response. 2020.2.1 [Asia Economy Reporter Park Hyesook] Incheon City has prepared measures to revitalize the domestic market for local small business owners amid concerns over the economic downturn caused by the spread of the novel coronavirus infection (Wuhan pneumonia).
The city announced on the 11th that it will first expedite the budget execution for environmental subsidies and related projects, actively utilizing local companies in the process.
Among the budget allocated for the environmental sector this year, 109.2 billion KRW for 581 cases will be promptly executed, with 71 billion KRW concentrated in the first half of the year to maximize the local economic effect. This budget execution rate is more than 8% higher than the Ministry of the Interior and Safety's target of 57%.
The city also plans to increase the proportion of local spending for private consignment and subsidy projects, which was in the 70% range last year, to over 90% this year.
To this end, the city requested its affiliated institutions and consignment/subsidy project operators to actively implement sector-specific tasks according to the environmental sector local economic revitalization plan, including ▲ expanding local company orders for construction, services, and goods manufacturing/purchasing ▲ increasing participation rates of local construction companies ▲ promoting the use of local materials, manpower, and equipment.
In particular, as part of the fine dust reduction project, the city sent cooperation letters to the relevant business sites and industrial complex associations to increase the contract rate with local installation companies for the installation project budget of 27 billion KRW for prevention facilities at about 2,000 business sites within industrial complexes.
The city plans to strengthen the responsibility system centered on department heads to frequently check the implementation status to ensure these measures achieve tangible results.
Along with this, the city will provide special management stabilization funds to small business owners suffering from the sharp contraction in consumer sentiment due to the impact of the novel coronavirus.
Focusing on food service, lodging, and wholesale/retail industries, the Incheon Credit Guarantee Foundation will guarantee loans up to 30 million KRW per company, providing 25 billion KRW in special management stabilization funds. The city will compensate 1.5% of the loan interest rate, and the Incheon Credit Guarantee Foundation will reduce the annual guarantee fee from the average 1.0% to 0.8%, easing the burden on small business owners.
The banks handling the special management stabilization fund loans are Kookmin Bank, NongHyup Bank, Shinhan Bank, Woori Bank, and Hana Bank, which have agreements with the city or the Incheon Credit Guarantee Foundation, and small business owners only need to bear an ultra-low interest rate in the low 1% range.
The city will expand loan support to low-credit borrowers (grades 6 to 10) without credit rating restrictions for small business owners, and in case of loan maturity, will allow extension on a yearly basis without repayment of the loan balance through phone application.
An Incheon city official said, "We decided to proactively supply special funds as small business owners, the backbone of the low-income economy, are expected to suffer serious damage due to the spread of the novel coronavirus," adding, "We will also work hard to restore the low-income economy by preparing response plans for each department as the economic task force operates five teams supporting small business owners, SMEs, tourism, price stabilization, and external cooperation."
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